Israeli banks will be able to
increase dividends and boost credit to large companies next year
after raising their capital levels to meet regulatory demands,
Israel’s banking regulator said on Wednesday.
Hedva Ber, Israel’s supervisor of banks, said the sector had
changed in recent years, with credit to more risky large firms
down 22 percent since 2011 while credit to households and small
business has jumped 30 percent.
She told a conference that the banking system was more
stable and more competitive in the wake of the global financial
crisis and more capable of withstanding the next crisis.
“The fact that the banks have met the regulatory
requirements will enable them, beginning in 2017, to expand
credit to large and manufacturing corporations as well,
following a significant decline in this credit in recent years,
and to increase the distribution of dividends to shareholders,”
Ber said.
She noted Israeli banks in 2015 distributed 9.5 percent of
net profit in dividends versus a global average of 26.5 percent.
In the second quarter, Hapoalim – Israel’s largest
lender – paid a dividend of 20 percent of its profit, while
Mizrahi Tefahot – the fourth largest – paid out 15
percent.
Israel’s top banks have core Tier 1 capital adequacy ratios,
which measure equity capital as a percentage of total
risk-weighted assets, at an average of 10.1 percent to satisfy
stricter regulatory demands, 28 percent above 2009 levels.
Ber noted 2017 would bring more competition in credit supply
to households and small businesses, with new players expected
following a new law aimed at lowering the cost of credit.
In July, Israel’s cabinet approved legislation aimed at
loosening the grip of the country’s largest banks on the credit
supply market. Under the law, Hapoalim and Leumi,
Israel’s second-largest lender, must sell off their credit card
businesses.
(Reporting by Steven Scheer; Editing by Mark Potter)